An In-Depth Analysis of the Underlying Problems Behind Farmland Transfer

After the Third Plenary Session of the 18th Central Committee of the CPC, the issue of farmland transfer was elevated to an unprecedented height. All parts of the country sprang into action one after another, and the intensity of the publicity, the prominence of the trend, and the ferocity of the push were enough to overwhelm all other rural work. It is estimated that by the end of 2014, the area of farmland transferred nationwide will approach or exceed 400 million mu, accounting for about 30% of the country's contracted arable land area. In terms of the scale of China's contracted arable land, this is a fairly large proportion; following this, a number of large farmers, large farms and other operating entities have emerged that occupy several thousand mu, more than ten thousand mu, or more than tens of thousands of mu of arable land through transfer, and in terms of China's per capita arable land, this is also a fairly “astonishing” concentration of scale. In November 2014, after the General Offices of the CPC Central Committee and the State Council issued the "Opinions on Guiding the Orderly Transfer of Rural Land Operating Rights and Developing Moderate-Scale Agricultural Operations," it will undoubtedly play a regulatory role in land transfer, and the momentum of relying on administrative means to push land transfer will cool down accordingly. But based on past experience and the complexity of China's land issues, its role cannot be overestimated. The undercurrents surging beneath China's farmland transfer deeply interrogate the author's conscience, and this serves as an opportunity to explore the related issues.

I. What Are Land and the Owners of Land?

What is land?

Land is the carrier of all material things in the world, and the foundation on which humanity and other living beings on Earth depend for survival, activity and development. A country's land is the foundation for the survival, livelihood, creation and development of that country's people. As the foundation of the people's activity, land is both the breeder and bearer of all material and spiritual wealth, and is itself an irreplaceable form of wealth. The land within a country's territory is formed through generations of development, cultivation, occupation, inheritance and development by the people of that country. Therefore, land is the homeland of the people, and the people are the owners of the land. A people who have lost their homeland have lost the basis and destination of their survival, and land without a people is ownerless land. The ultimate ownership of land can only belong to the people.

What is farmland?

Farmland is the foundation for the survival and development of the village community farmers living within a certain area, cultivated, occupied, operated, developed and inherited by them over generations. The nation's land is the aggregate combination of the farmland of each village community. Farmers, and only farmers, are the owners of the village community's land. Farmers who have lost their land are no longer farmers, but have become people without roots, unable to advance or retreat.

Because land is the irreplaceable carrier and foundation for humanity's livelihood and development, the most fundamental of all forms of wealth, and because farmland is the basis of farmers' livelihood and development, the foundation for having somewhere to advance or retreat, and the root of their material and spiritual homeland, any policy, law or reform measure concerning land and farmland relates to the foundation of the nation and the roots of the people, and requires extreme caution, as if treading on thin ice.

II. What Is Farmland Transfer and Why Transfer It?

What is farmland transfer?

In a general sense, farmland transfer includes the sale, lease, shareholding, mortgage, guarantee and expropriation of farmland. But under China's conditions, farmland whose ownership does not belong to farming households is not legally permitted to be sold; the contract rights or operating rights may be transferred. Farmland mortgage and guarantee generally also refer to the mortgage and guarantee of contract rights or operating rights. In recent years, although the state's major policy level has already permitted this, due to lagging supporting measures and the uncertainty and lack of clarity of collective ownership and farmers' contract rights, operation is fraught with difficulties. Thus, under China's conditions, what is feasible and relatively easy to operate in farmland transfer is subcontracting, leasing, shareholding and expropriation. Farmland expropriation, however, is a special form of farmland transfer and does not fall within the scope of normal transfer; farmland subcontracting is in effect equivalent to leasing and subleasing among members of the same community. Therefore, conventional transfer in reality is mainly leasing and shareholding.

Why must farmland be transferred?

From the broader background, farmland transfer emerged under the non-agricultural transfer of rural labor and rural population. This transfer began in the mid-1980s, and after entering the twenty-first century, the speed, breadth and depth of the transfer have been accelerating, expanding and deepening, with the number of people drawn into migration each year said to be as many as two or three hundred million, most of them young and middle-aged adults, leading to many rural families with "empty-nest elderly," "left-behind women" and "left-behind children," and a "38-60" style farming workforce. This broader background has indeed provided objective conditions for farmland transfer. Under these background conditions, in recent years some people have loudly proposed that promoting farmland transfer is meant to solve "the problem of who will farm the land."

Is the land really no longer farmed by anyone? Or, is it true that the remaining "38-60" group in the countryside cannot farm the land well?

If this were really so, it would be impossible to understand the good result of the nation's grain output achieving "eleven consecutive increases." Under the pattern of an average of 7.5 mu of arable land per farming household in China, and under conditions where agricultural mechanization is increasingly saving labor, China's farmland is not unfarmed by anyone but is simply not enough to farm. Even if only "38-60" style farmers truly remained, under modern conditions of seeds, agricultural machinery, chemical fertilizers, pesticides and widespread agricultural technology, if treated seriously, they could still coax those pitiful few mu of land into blooming "splendidly." Moreover, the countryside does not truly have only "38-60" style farmers left, and furthermore a considerable portion of the young and middle-aged adults who go out to work still return home to farm during the busy agricultural season.

Frankly speaking, the "problem of who will farm the land," which some people have hyped so fervently in recent years, is actually a false proposition.

There is a very mainstream claim: farmland transfer is for raising farmers' incomes.

This too is a specious argument. One may ask, exactly whose incomes can it raise? Is it raising the incomes of farmers who transfer out their land, or the incomes of farmers who transfer in land? Because these are completely different matters.

If it is said to raise the incomes of farmers who transfer out their land, then a specific "comparison account" must be calculated. That is, what were the farmers' annual income and expenditure before transferring out the land, and what are their annual income and expenditure after transferring out the land, and this must be calculated over several consecutive years. But the author has not seen a convincing comparative accounting method. The currently more popular claim is: farmers who transfer out their land have income from land rent or land shareholding each year, and in addition can have income from working, and it seems that adding these two incomes together naturally means an increase. But the problem is, before farmers transfer out their land, they also had income from farming and also had income from working, likewise two kinds of income; on what basis is it said that income after transferring out land will necessarily be higher than income before transferring out land? From the expenditure side, farmers before transferring out land certainly had cost expenditures for purchasing agricultural inputs and using water and electricity; after transferring out land, these costs are saved, but expenditures for purchasing grain and other agricultural products are added, and it is hard to determine by intuition alone which type of expenditure is greater.

If it is said to raise the incomes of farmers who transfer in land, this is more plausible in principle. Because after reaching a certain scale through transferring in land, productivity rises accordingly, operations tend toward economy, costs decline somewhat, unit marginal benefits increase, and overall income rises. But this is only theoretical; the actual situation is far more complex. Exactly what scale is relatively economical and reasonable, and can achieve the goal of intensification, depends on multiple factors. There may also be the phenomenon that the more land is transferred in, the greater the loss. There is also the influence of climate factors. Even if it is said that the incomes of farmers who transfer in a certain scale of land generally increase, what does this have to do with other farmers, including those who transfer out land?

There is another claim that also has a strong following: against the background of deepening non-agricultural transfer, more and more farmers are no longer so dependent on land, and for them farming has become a side occupation, or even a burden, so transfer is naturally needed, and they even urgently demand transfer. This claim seems reasonable but at bottom is making judgments on behalf of farmers.

It must be said that as non-agricultural transfer deepens, many farmers have indeed reduced their degree of dependence on land; this is indeed a fact. But this in no way indicates that farmers no longer value their contracted land. Farming may already be a burden for some farmers, but possessing contracted land cannot possibly become a burden for all farmers. Because first, even if relatively stable conditions for transfer have been obtained, the question of a way back is something every rational farmer must consider. Moreover, most "transferred farmers" have not obtained relatively stable conditions. Second, contracted land in farmers' eyes is their own immovable property; some farmers may live without relying on land, but it is impossible for them not to value their own land as immovable property. Third, whether farming is a burden, whether contracted land should be transferred, whether transfer is urgent, and what form of transfer to adopt, must in the final analysis be judged by farmers themselves, and should not be judged on behalf of farmers by other people (including the government and relevant departments).

Then, what is the real driving force behind China's farmland transfer today?

The real driving force lies in the existence of several different forces expressing different interest demands around farmland transfer, thereby constituting the basic impetus driving farmland transfer.

The first force is farmers seeking to expand their operating scale. These farmers have a business mindset, keen thinking and forward-looking vision; over many years through diligent operation they have accumulated a certain amount of capital and network resources, and they also understand policy directions relatively well. They hope to achieve a certain degree of intensification by expanding their operating scale and raise their income level, and also hope to exchange expanded operating scale for government support and policy preference. But this group of farmers accounts for a very small proportion, and they cannot represent the wishes and interests of the majority of farmers.

The second force is village cadres with certain power resources and a business mindset. Such as Party branch secretaries, village committee directors, and so on. These people are both farmers and cadres, possess a certain amount of power and network resources, and coupled with a business mindset, have used their power and abilities to accumulate a certain economic strength, and have "the advantage of being close to the water to get the moon first" in understanding the direction of national policy and the behavioral preferences of local governments. This group fervently hopes to control more resources through land transfer, obtain more policy dividends, and further raise their own economic and social status. Their enthusiasm for transferring land is both high, and they possess the power to directly promote such transfer. This is the most grounded and most unignorable of the several forces. But quite obviously, they also cannot represent the wishes and interests of the majority of farmers.